Bitwise, the world’s largest crypto index fund manager, has recently taken a big step toward launching the first U.S. XRP exchange-traded fund (ETF). In a new filing with the Securities and Exchange Commission (SEC), Bitwise outlined fresh details about how it plans to safeguard assets and manage trading. These updates offer insights into Bitwise’s strategy and could signal exciting developments for XRP ETFs in the U.S.
Secure Custody of XRP Assets
According to Bitwise’s updated S-1 filing with the SEC, the XRP assets in its ETF will be safeguarded through Coinbase Custody. Most of these holdings will remain in secure cold storage, with occasional transfers to hot wallets only when necessary for trading and handling expenses.
As a trusted platform for institutional clients, Coinbase Custody will also keep Bitwise’s XRP assets separate from Coinbase’s own funds. This separation helps to protect investors’ assets from unauthorized access or theft.
Beyond custody, Coinbase will act as the Prime Execution Agent for Bitwise’s XRP trades. This means Coinbase will handle all XRP transactions across major exchanges, including its own platform, Bitstamp, Kraken, and LMAX.
Meanwhile, to keep operations smooth, Coinbase will provide short-term financing if needed for quick trades. For larger transactions, known as “Baskets,” Bitwise will allow only blocks of 10,000 shares to ensure efficient fund management.
Legal Risks and Future of XRP
Bitwise’s filing also acknowledges the risks tied to the legal status of XRP, which is still under regulatory review. In a high-profile case against Ripple, the SEC has argued that XRP is a security, although recent court decisions have challenged this view.
Bitwise has noted that if XRP is ultimately classified as a security, the ETF could face serious consequences, including forced liquidation of its holdings.
What’s Next for XRP ETFs in the U.S.?
If either Bitwise or Canary Capital, another contender, secures approval, it would mark the first U.S. spot XRP ETF, providing investors with regulated access to XRP. For now, those interested in XRP exposure can only access it through the Grayscale XRP Trust on the Over-the-counter (OTC) market.
However the approval of these ETFs would be a major milestone, potentially opening the door to broader, regulated XRP trading.
